A tax bracket is a band in SARS's progressive tax tables. Income within a band is taxed at that band's marginal rate, and only the portion that falls into a higher band is taxed at the higher rate.
What it means
The tables are progressive: low income is taxed at the lowest rate, and each rand above a band's ceiling is taxed at the next rate up. This means a pay rise that crosses into a higher bracket only taxes the part above the threshold at the higher rate, not the whole income - a common misunderstanding.
Where it fits in
PAYE annualises the balance of remuneration, reads the tax off the brackets, subtracts the rebates, and divides back to the pay period. The brackets are published per tax year, which is why an employee's PAYE can change in March even if their pay does not.
Key rules
- A band of taxable income taxed at a fixed marginal rate.
- Progressive: only income above a band's ceiling is taxed at the next rate.
- Applied to the annualised income in the PAYE calculation.
- Updated by SARS each tax year.
